Homex Bonds, Stocks Soar as Slim to Buy Company’s Prisons

April 19 (Bloomberg) -- Desarrolladora Homex SAB, the
Mexican homebuilder seeking to avoid a debt restructuring,
agreed to sell its stake in two prisons to companies controlled
by billionaire Carlos Slim. Homex’s bonds and stock surged.

Homex said in a stock exchange filing it will raise about 4
billion pesos ($326 million) in a sale to Slim’s Ideal and Grupo
Financiero Inbursa SAB, which had 1.8 billion pesos in
outstanding loans to Homex at the end of last year. The company,
based in Culiacan, will use about half of the money as working
capital and the rest to pay down debt ahead of schedule.

The company’s bonds due in 2020 soared 20.05 cents, a
record, to 79.11 cents on the dollar at 4 p.m. in Mexico City,
according to data compiled by Bloomberg. The shares jumped 40
percent, the most ever, to 16.89 pesos.

Homex’s creditors are getting a respite after the
securities plunged on concern Mexico’s biggest publicly-traded
homebuilders will struggle to generate cash after the government
shifted its housing policy to emphasize capital-intensive
apartment construction near cities, instead of single-family
homes in commuter towns. While competitors Urbi Desarrollos
Urbanos SAB and Corp. Geo SAB hired banks for advice on possible
restructurings, Homex has said it would seek to raise cash
through asset sales and junior debt issuance.

“What’s really impressive is the willingness to pay these
guys have shown,” Jim Harper, director of corporate research at
BCP Securities LLC, said in a telephone interview from
Greenwich. “You would think that there would be a temptation to
follow the same path” as Geo and Urbi.

Slim’s bank, Inbursa, and construction firm Impulsora del
Desarrollo y el Empleo en America Latina SAB, known as Ideal,
will buy the stake in the prisons, one in Morelos state and the
other in Chiapas. Homex expects to stay on as builder of the
prison in Morelos and to participate in the operations of both
prisons, according to the statement.

Prison Business

As the transaction buys Homex time to adapt to the changing
homebuilder industry, it’s giving Slim the opportunity to enter
the prison business, according to an e-mail today from the
billionaire’s son, Inbursa Chairman Marco Antonio Slim.

Homex had bank loans through Inbursa totaling at least 1.8
billion pesos as of the end of 2012, according to the builder’s
fourth-quarter report.

Urbi said today that it wouldn’t make the $6.4 million bond
payment due today. The Mexicali, Mexico-based company said it
planned to use the 30-day grace period for payment while it reviews
its business, according to a regulatory filing today.